Acquisition Of Land By Foreigners in Tanzania 2020 The Complete Guide

Acquisition Of Land By Foreigners in Tanzania is defined under the Land Act, all land in Tanzania belongs to the State. By virtue of section 20(1), non-citizens are prohibited from being allocated land in Tanzania. This section reads as follows:

For avoidance of doubt, a non-citizen shall not be allocated or granted land unless it is for investment purposes under the Tanzania Investment Act (CAP 38 R.E 2002)

The import of this provision is strictly limited to direct allocation and grant by the government only. It does not go further to restrict a purchase from an individual or private person. There is no a single provision in either the Village Land Act or the Land Act which says an individual shall not sell his land to a foreigner.

The Land Act does not restrict foreigners to acquire land by other means, like purchase in the market, or by buying shares in companies, which are holding rights of occupancy; or, by purchase from the government through tenders and auctions, by virtue of Land Act section 52 and GN.No.73 of 2001; or purchase from the Parastatal Sectoral Reform Commission (PSRC).

A foreigner can acquire land by means of a derivative right from a village council, by virtue of section 32 of the Village Land Act.

It is true that there is no provision in either the Land Act or the Village Land Act, which stipulates that a foreigner cannot purchase land in the open market. However, with the advent of the 2004 amendment to the Land Act, the Land (Amendment) Act, 2004, Act No. 2 of 2004, one has to be cautious.

Section 19(2) has brought enormous change to the issue of ownership of land by non-citizens. This section enacts that a non-citizen may only obtain a right of occupancy through the Tanzania Investment Centre (TIC).

There is nothing in either the Land Act or the Village Land Act that suggests that a foreigner can buy land in an open marketplace, or through tenders and auction. Section 52 of the Land Act, which is cited by suggests nothing to the effect that a non- citizen can buy land.

Even the so-called derivative right under section 32 of the Village Land Act is not determinative. If there were a restriction on an individual’s ability to sell his land to a foreigner, the mortgage market in Tanzania would have been impossible.

Acquisition Of Land By Foreigners in Tanzania

This is the case because most banks in Tanzania are foreign, yet they are legally accepted as mortgagees. Now, because mortgage carries with it the power of sale, any bank, which is a mortgagee, has the power of sale. And if the bank is foreign, and since there is nothing in the land laws to bar an individual from selling land to foreigners, then an individual can lawfully do so.

Only the government is barred from allocating land to foreigners. Note that land allocation is only one way or method of acquiring land. Other methods include gifts and purchases. Since the two are not prohibited by any provision, then it is lawful for a foreigner to buy land from a citizen.

That position, however, in my considered opinion, is made untenable by the provisions of section 19(2). [Note that this provision came vide 2004 amendment in Land (Amendment) Act, 2004, Act No. 2 of 2004]. This provision provides as follows:

A person or a group of persons whether formed into a corporate body under the Companies Act or otherwise who are non-citizens, including a corporate body the majority of whose shareholders or owners are non-citizens, may only obtain:

(a) A right of occupancy for purposes of investment approved under the Tanzania Investment Act, 1997, or

(b) A derivative right for purposes of investment approved under the Tanzania Investment Act, 1997, or

(c) An interest in land under a partial transfer of interest by a citizen for purposes of investment approved under the Tanzania Investment Act, 1997 in a joint venture to facilitate compliance with development conditions.

The emphasized phrases here are only obtain and partial interest by a citizen. The amendments that were effected in 2004 have sealed an opportunity, which was in place before then. It is true that before the amendment the Act simply restricted allocation but not any other means of acquiring the land.

Thus, it was possible for a foreigner to buy land from a citizen. Now, in light of section 19(2), it is difficult to see how a foreigner can purchase a right of occupancy from a citizen.

The difficulty faced is that it seems it was the purpose of the framers of the Land Act for the TIC to have the land bank, which would cater for the purposes of investment. That is not in place today.

Note that it is a fundamental principle of statutory interpretation that statutes should be interpreted as a whole to give it its true intended meaning.

Reading sections 19 and 20 of the Land Act, there is no doubt that the meaning intended is that a foreigner should not own land in Tanzania, and can only do so by means of buyingthrough the TIC. This is so because the Act clearly has put in place the mechanism through which a foreigner can acquire land. This is clearly stated in section 20 of the Land Act, which reads as follows:

Acquisition Of Land By Foreigners in Tanzania

(1) For avoidance of doubt, a non-citizen shall not be allocated or granted land unless it is for investment purposes under the Tanzania Investment Act ( CAP 38 R.E. 2002).

(2) Land to be designated for investment purposes under subsection (1) of this section shall be identified, gazetted and allocated to the Tanzania Investment Centre which shall create derivative rights to investors.

(3) For purposes of compensation made pursuant to this Act or any other written law, all lands acquired by non-citizens prior to the enactment of this Act, shall be deemed to have no value except for unexhausted improvements for which compensation may be paid under this Act or any other law.

(4) For the purposes of this Act, any body corporate of whose majority shareholders or owners are non-citizens shall be deemed to be non-citizens or foreign companies.

(5) At the expiry, termination or extinction of the right of occupancy or derivative right granted to a non-citizen or a foreign company, reversion of interests or rights in and over the land shall vest in the Tanzania investment Centre or any other authority as the Minister may prescribe in the “Gazette”.

This is coupled to other restrictions found in section 19 of the Land Act, which enacts as follows:

Rights to occupy land By Foreigners

Sect 19 .1 the rights to occupy land which a citizen, a group of two or more citizens whether formed together in an association under this or any other law or not, a partnership or a corporate body in this Act called “right holders”, may enjoy under this Act are hereby declared to be-

(a) A granted right of occupancy;

(b) A right derivative of a granted right of occupancy, in this Act called a derivative right. A person or a group of persons whether formed into a corporate body under the Companies Act or otherwise who are non-citizens, including a corporate body the majority of whose shareholders or owners are non-citizens, may only obtain:

(a) a right of occupancy for purposes of investment approved under the Tanzania Investment Act, 1997, or

(b) a derivative right for purposes of investment approved under the Tanzania Investment Act, 1997, or

(c) an interest in land under a partial transfer of interest by a citizen for purposes of investment approved under the Tanzania Investment Act, 1997 in a joint venture to facilitate compliance with development conditions.

Thus, the thrust of the Act is that land can only be allocated to non-citizens for purposes of approved investment projects and not otherwise. This is the clear intention of the framers of both the Land Act and the Village Land Act.

Recourse has been taken to section 32 of the Village Land Act as a way of acquiring land by foreigners. Nevertheless, that section is not determinative in light of sections 19 and 20 of the Land Act.

In this article, we would suggest that the best way to advise a foreigner to own land in Tanzania is by way of lease. Note that all rights of occupancies are leases (However a Granted Right of Occupancy is independently distinguished from a lease in the ordinary sense).

A foreigner can lawfully and legally own land in Tanzania by entering into a lease for the whole period of the right of occupancy, less one day. Here, however, there is a problem of reversionary right to the lessor and the fear of breaching the terms of the lease that the lessor might turn against the lessee. This, however, can be solved through correct drafting of the lease agreement.

Another way of owning land would be by establishing a trust in Tanzania. Any trust established in Tanzania is legally recognised as a Tanzanian, and therefore can legally own land.

Land Acquisition through the Tanzania Investment Centre

The foreigner who does not wish to go this route can be advised to go through the TIC. Note that generally land can be owned under three categories, namely government grantedright of occupancy; TIC derivative rights; and sub-leases created out of granted right of occupancy.

Note further that rights of occupancy and derivative rights are granted for a short-term and a long-term period. Long-term rights of occupancy range from five to 99 years and are renewable, but not for more than 99 years; whereas short-term derivative rights of occupancies and leases range from five to 98 years.

Under the TIC route, the following are the requirements for application of a right of occupancy:

  1. Duly filled Form No. 19
  2. Passport-size photograph
  3. Application fees
  4. Any other information requested by the Commissioner for Land seconded to the TIC
  5. Declaration of all rights and interests in land in Tanzania, which the applicant has at the time of application of land to the TIC.
  6. Consent of local authority or other body where any law requires that consent should be sought and obtained by the applicant (this applies to citizens, whereas for non-citizens the TIC is supposed to do this on their behalf).
  7. Application by a non-citizen or foreign company should be accompanied by a certificate of incentives granted by the TIC

Acceptance of offer of a right of occupancy shall be by fulfilling the following conditions

  1. By filling and signing Land Form No. 20 (for urban land) or Land Form No. 21 (for farmland) and signed by the applicant or his authorized representative or agent
  2. Accompanied by payment of necessary fees.

A certificate of occupancy shall be issued, i.e. Land Form No. 22 for urban land and Land Form No.23 for farmland.

Land Acquisition By Foreigner Investors In Different Categories

Under the Land Act, citizen investors can acquire land by a granted right of occupancy or a derivative right or by obtaining a sub-lease from the private sector. For non-citizens, occupation of land is restricted to land for investment purposes under the Tanzania Investment Act. Under the Land Act, a foreigner investor can acquire land through:

(a) Derivative rights under section 20(2) of the Land Act

b) Application to the Commissioner for Lands for grant of right of occupancy under section 25(1) (h) and (i) of the Land Act

(c) Sub-leases from the private sector (note: this will be by concluding a contract between the individuals concerned);

d) Purchases from other holders of the granted right of occupancy.

Procedures to acquire farmland By Foreigner Investors In Tanzania

  1. Application to be submitted to the District Land Authority
  2. Consideration by the District Land Allocation Committee for land up to 500 acres; in cases where the land sought exceeds 500 acres, a recommendation by the District Land Commission shall be made to the Minister for Lands.
  3. Application approval for land up to 500 acres (the Minister for Lands does this)
  4. District land officer should be notified about the approval, or the rejection of the approval
  5. Application notified; with the notification to the applicant
  6. Letter of offer will be issued stipulating the fees to be paid, Land Form No. 21
  7. Certificate of occupancy will be prepared, Land Form No. 23
  8. Certificate registration
  9. duplicate of certificate will be given to the occupier

Fees to be paid By Foreign Investor to Acquire Land in Tanzania:

  1. Survey fee
  2. Registration fee
  3. Preparation fee;
  4. Stamp duty.

Note that the investor will also have to pay land rent.

Procedure to acquire urban land By Foreign Investors:

  1. Application to be submitted to urban authority, Land Form No. 19
  2. Application to be submitted to the Urban Allocation Committee
  3. Application approved
  4. Letter of offer issued will stipulate fees to be paid
  5. Certificate of occupancy prepared, Land Form No. 22
  6. Certificate registered by the registrar of titles
  7. The duplicate certificate will be given to the occupier

Fees to be paid to acquire urban land By Foreign Investors:

  • Survey fees;
  • Registration fees;
  • Preparation fee;
  • Stamp duty:
  • Industrial plots.

Procedure to acquire derivative right and farmland By Foreign Investors in Tanzania

  1. Land identification
  2. Land gazettement by the Ministry
  3. Land designation to TIC by the Commissioner for land: Form No.1
  4. Submission of application to the Executive Director, TIC
  5. Application approved by the TIC
  6. Preparation of derivative rights
  7. Derivative title registered
  8. Duplicate derivative title given to the occupier.

Acquiring Land In Villages By Foreign Investors

One can acquire land in a village through application to the Village Council with jurisdiction to determine land matter in the village. Under section 32 of the Village Land Act, the Village Council has powers and mandate to grant derivative rights. Derivative rights are defined in section of the Village Land Act in the following terms.

“derivative right” means a right to occupy and use land created out of a right of occupancy and includes a lease, a sublease, a license, a usufructuary right and any interest analogous to those interests

The Village Land Act requires the applicant of land in a village to follow certain instructions, failure of which will make the disposition void. Section 31 of the Village Land Act enacts as follows.

This section applies to the disposition, by the holder of a certificate of occupancy or right of occupancy, of a derivative right in the land held for a customary right of occupancy. A disposition of a derivative right to which this section applies shall- (a) Comply with the provisions of this section and the sections 32 and 33; (b) Be void if the provisions of the sections referred to in paragraph (a) are not complied with.

The first condition is that the applicant should seek and obtain the approval of the Village Council. Section 31(3) of the Village Land Act enacts as follows:

Unless otherwise provided for by this Act or regulations made under this Act, a disposition of a derivative right shall require the approval of the village council having jurisdiction over the village land out of which that right may be granted.

Thus, it is a prerequisite condition that the approval of the Village Council should be sought and obtained. The consequence of failure to do so, the Act declares, is to render the disposition void, as stipulated in section 3 1(2) (b).

The Act further enacts that the application for approval of the disposition of the village land should be done in a prescribed form. Section 31(6) stipulates as follows:

An application for approval to a grant of a derivative right

  1. Made to the village council on a prescribed form;
  2. Signed by the applicants;
  3. Accompanied by a simple plan showing the location and boundaries of the land and any further information, which may be prescribed;
  4. Accompanied by any fees, which may be prescribed.

Approval of the derivative right shall be personal to the applicant and non-assignable, as per section 31(8) of the VILA. The other important conditions for the derivative rights are detailed in subsection 9 of section 31, which provides that:

Approval of a derivative right

  1. In the prescribed form to be known as a “certificate of approval to a derivative right” with the specific derivative right for which approval has been given named in brackets;
  2. Signed by the chairman and secretary of the village council;
  3. Accompanied by a demand for any premium, rent, taxes or dues which may be prescribed or which may be determined by the village council;
  4. Delivered or sent by registered letter to the holder of the certificate of customary right of occupancy to his last known abode or his usual place of business;
  5. Entered in a register of appeals to be kept by the village council.

Note: the derivative right is capable of being registered in the register of the village land and the same shall have priority over unregistered derivative rights created out of the same customary rights of occupancy. Section 31(12) provides as follows

A derivative right may be registered in the register of village land and that registration shall- Constitute notice of the existence and content of that derivative right, confer priority on that derivative right as against any derivative right created out of the same customary right of occupancy before the registered derivative right which has not been registered, whether or not that prior created derivative right was known to the grantee of the later created derivative right.

The prescribed form under which an application for derivative rights should contain or meet the following conditions is stipulated in section 32(2) of the VLA:

An application for a grant of a derivative right shall be made to the village council on a prescribed form;

Signed by the party applying for the derivative right or his duly appointed agent or representative;

Accompanied by simple plan showing the location and boundaries of the land and any other information which may be prescribed or which may be required by the village council. Accompanied by any fees, which may be prescribed. Notified to the members of the village by any means of publicity, which will bring. The matter to their attention.

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